- Company starts output at U.A.E. offshore natural gas field
- Gas will be used in U.A.E. emirate of Sharjah for power
Dana Gas PJSC, which produces natural gas in Egypt and Iraq, rallied to the highest in more than one year in Abu Dhabi trading after expanding output to the United Arab Emirates with an offshore natural gas field.
The company started production from the Zora Gas Field, off the coasts of the U.A.E. emirates of Sharjah and Ajman, Dana Gas said in an e-mailed statement on Wednesday. The field is expected to achieve a flow rate of 40 million cubic feet a day, or 6,650 barrels of oil equivalent, it said.
“Zora is our first development project in the U.A.E, and as such, represents a significant milestone in the company’s 10-year history,” Chief Executive Officer Patrick Allman-Ward said in the statement. Sales from the U.A.E. and Egypt will “help to offset the decrease in revenue and profits resulting from the current low oil price environment.”
Dana Gas jumped as much as 7.8 percent to 0.55 dirham, the highest since Oct. 7, 2015, and was at 0.53 dirham at 12 p.m. Dubai time. The shares have climbed 3.9 percent this year.
Gas from Zora is being transported through a undersea pipeline to a newly built onshore gas processing facility in the Hamriyah free zone in Sharjah, the company said. The gas will be sold for use in power generation in Sharjah, allowing cost savings from displacing part of the current sources, which include diesel fuel, it said. Dana Gas is the operator of Zora with a 100 percent interest, and will manage the field and the gas sales and purchase agreements, it said.
Dana Gas’s cash and bank balances more than doubled to 1.7 billion dirhams at the end of 2015 from 674 million dirhams at the end of 2014 as a result of a settlement with RWE AG’s trading unit, according to a Feb. 14 statement. In November, Dana Gas and its partners settled an arbitration dispute with the RWE unit and agreed to sell a 10 percent stake in the Pearl Petroleum venture in the semi-autonomous Kurdish region in Iraq.
The company plans to boost production to more than 70,000 barrels of oil equivalent a day by the end of the year, Allman-Ward said on a conference call last month. Production was 63,900 barrels of oil equivalent in 2015.
Company sales fell to 1.5 billion dirhams last year from 2.5 billion dirhams a year earlier as the decline in oil prices eroded profit, Allman-Ward then said. Global benchmark Brent crude prices have dropped about 40 percent in the past year. Gas prices are often linked to oil prices.